Speculators starting to panic as settlements due

Posted by Khurram Saeed on Aug 20, 2018 4:39:00 AM

 

Tighter lending by the major banks and a drop in demand from buyers is seeing broadacre prices easing in Melbourne’s growth areas in 2018 and this will challenge many land owners who are planning on selling their land at pre 2018 prices.

Prices for broadacre land has slipped from their peak late last year and a number of new entrants are having difficulty receiving project funding as land parcels they had purchased couple of years ago come up for settlement.

We are seeing plenty of off market transactions where the speculators have put down deposits 2-3 years ago and with settlement around the corner they are panicking.

Speculators made their money previously by on-selling development sites before settlement but as the music stops and they can’t find anyone to on-sell to they are turning to developers like us to undertake Land Development Agreements and Joint Ventures.

This is not great news for landowners hoping to sell their land at last year’s rates but there is a way to preserve value – which is to undertake a Land Development Agreement with a well-capitalised developer.

Resi Ventures has secured funding for all its major projects through the private equity funds that are stepping in to replace the big banks and we are looking for new opportunities across Melbourne.

The best way for land owners in future PSP areas, such as Warrensbrook, to extract maximum value from their land is to undertake Land Development Agreement or Joint Ventures that would see the value of the land preserved in the long term.

Resi Ventures was created to undertake LDA & JV with land owners and to help maximise their total returns. The LDA and JV model has always existed for larger developments (1000+ lots), however RV has brought this to the average land owner in the growth corridor who may only have 10-12hectares of land yet wanted to maximise the returns.

Resi Ventures, that has over $600 million of projects underway across Melbourne’s North and West, prefers to undertake land development agreements and joint ventures with land owners rather than buy land outright.

The LDA & JV model allows the land owner to hold the title in their name while we pay for everything from PSP planning approval, getting the highest and best use planning permit, undertaking all the sales and marketing through to infrastructure and then sharing the profits from the sales at the end.

It means you don’t have to sell your land in a falling market and can reap the rewards by sharing in the profits over the life of the development

 

 

For more information on how we have made LDA model work for other land owners all across Melbourne’s Growth Corridors, you can visit us at: resiventures.com.au/LDA

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